Delcorp (SA) Pty Ltd T/A De Luca's On The Park
[2010] FWA 2952
•21 APRIL 2010
[2010] FWA 2952 |
|
DECISION |
Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement
(AG2010/6498)
COMMISSIONER HAMPTON | ADELAIDE, 21 APRIL 2010 |
Application for approval of the Delcorp (SA) Pty Ltd Enterprise Agreement 2010 – application refused.
[1] An application has been made for approval of an enterprise agreement known as the Delcorp (SA) Pty Ltd Enterprise Agreement 2010 (the Agreement). The application was made pursuant to s.185 of the Fair Work Act 2009 (the Act). It has been made by Delcorp (SA) Pty Ltd (the employer) which at the time of the application was in the process of establishing a new coffee and wine bar (De Luca’s On The Park) in Adelaide. The agreement is a single-enterprise agreement which is intended to apply to the new operations 1 and it has not been made or filed as a Greenfields agreement.
[2] On 11 March 2010, I issued a comprehensive preliminary assessment of the application to the parties and sought further information and submissions. That assessment highlighted a number of concerns with the process leading to the making of the Agreement and some concerns with the proposed Agreement itself.
[3] The concerns about the making of the Agreement were primarily associated with the fact that the declaration filed on behalf of the employer in this matter indicated that there was only one employee who was at the time to be subject to the Agreement. This raised concerns as to whether there were grounds to believe that the Agreement has not been genuinely agreed to by the group of employees.
[4] The concerns about the content of the Agreement involved, amongst other matters, the need to understand the practical intended operation of the instrument given its reliance upon a loaded salary rate for most employees. In addition, the arrangements applying to part-time and casual employees had to be further considered.
[5] The matter was further considered by me following a conference with representatives of the parties, including some “employees” who were to be engaged, on 17 and 18 March 2010. At the conclusion of that conference I indicated that I would further consider those matters concerning the making of the Agreement in light of the positions as advanced. Further, I also confirmed that should the employer wish to provide formal undertakings as to the intended operation of the Agreement I would consider those, subject to being satisfied that a valid agreement had been made under the Act.
[6] The employer subsequently supplied various undertakings and an indicative roster. I have now considered all of the material before me on this matter.
[7] I have determined that the application for approval should not be granted. My reasons for that conclusion are set out hereunder.
[8] Section 186(2) of the Act requires that in order to approve an enterprise agreement, (not being a Greenfields agreement) an agreement must have been genuinely agreed between the employer and the employees who are to be covered. In that context, the employees concerned for the purposes of s.186 are those already employed rather than those who may be employed at a later date and become bound by the agreement. This is made clear in s.181 of the Act.
[9] Section 188 of the Act also provides that for an enterprise agreement to be approved, Fair Work Australia must be satisfied that the agreement has been genuinely agreed to by the relevant employees having regard to specific statutory requirements. It does so in the following terms:
“188 When employees have genuinely agreed to an enterprise agreement
An enterprise agreement has been genuinely agreed to by the employees covered by the agreement if FWA is satisfied that:
(a) the employer, or each of the employers, covered by the agreement complied with the following provisions in relation to the agreement:
(i) subsections 180(2), (3) and (5) (which deal with pre-approval steps);
(ii) subsection 181(2) (which requires that employees not be requested to approve an enterprise agreement until 21 days after the last notice of employee representational rights is given); and
(b) the agreement was made in accordance with whichever of subsection 182(1) or (2) applies (those subsections deal with the making of different kinds of enterprise agreements by employee vote); and
(c) there are no other reasonable grounds for believing that the agreement has not been genuinely agreed to by the employees.”
[10] The specific criteria raised by s.188 include s.181 of the Act.
[11] Section 181 of the Act is in the following terms:
“181 Employers may request employees to approve a proposed enterprise agreement
(1) An employer that will be covered by a proposed enterprise agreement may request the employees employed at the time who will be covered by the agreement to approve the agreement by voting for it.
(2) The request must not be made until at least 21 days after the day on which the last notice under subsection 173(1) (which deals with giving notice of employee representational rights) in relation to the agreement is given.
(3) Without limiting subsection (1), the employer may request that the employees vote by ballot or by an electronic method.”
[12] Section 182 of the Act provides that an agreement is made when, after the process in s.181 has been followed, a majority of those employees who cast a vote, have approved the agreement.
[13] As outlined earlier, the Form 17—Employer’s Declaration in Support of Application for Approval of Enterprise Agreement, filed in the Tribunal, indicated that one employee was employed at the time of making the Agreement. The declaration also on face value supported the notion that each of the notice and employee endorsement steps set out in the Act had been met in relation to that employee.
[14] It was clear that the new coffee and wine bar would employ more than the single employee cited in the application. It was also evident that the bar was not yet operational and this raised the question as to whether the agreement was validly made under the Act.
[15] This is an important question given that considerable emphasis is placed by the Act upon the process leading to the agreement. This is evident from the various information, negotiation and endorsement requirements of the Act that are designed to enable the employees to form an informed and genuine position on any proposed agreement. It is also evident that the Act provides that this assessment and endorsement is to be made (except in the case of a greenfields instrument) by those who are employed at the time and who will be subject to the agreement. A process whereby that endorsement is made by a single employee on behalf of a group of employees who are yet to be employed must be carefully considered.
[16] Subsequent information provided to me has indicated that the employee in question does work for the employer. That is, the employee is employed by the employer in one of its related hospitality operations and has been requested to assist with the establishment of the new bar operation. In that role, the employee in question has been assisting with planning and licensing approvals and various establishment functions but is not working in their capacity as a hospitality worker. I have been assured that the employee will be engaged under the Agreement, if it were to be approved, when the new operation commences. I have dealt with this matter on that basis.
[17] In that context, I note that a greenfields agreement could have been made at the point that this application was lodged. Section 172(2) of the Act provides as follows:
“Single-enterprise agreements
(2) An employer, or 2 or more employers that are single interest employers, may make an enterprise agreement (a single-enterprise agreement):
(a) with the employees who are employed at the time the agreement is made and who will be covered by the agreement; or
(b) with one or more relevant employee organisations if:
(i) the agreement relates to a genuine new enterprise that the employer or employers are establishing or propose to establish; and
(ii) the employer or employers have not employed any of the persons who will be necessary for the normal conduct of that enterprise and will be covered by the agreement.
Note: The expression genuine new enterprise includes a genuine new business, activity, project or undertaking (see the definition of enterprise in section 12).”
[18] The enterprise here is a genuine new business and the employee concerned was not employed at the time in a capacity that would be necessary to normally conduct that enterprise. The question is however whether the employer and the employee were capable of making a valid s.172(2)(a) (non-greenfields) agreement in this case?
[19] In my view, references to those employees who are employed and who would be covered by the Agreement in ss.181 and 186 of the Act, must mean employees of the employer who are genuinely employed within the enterprise that will be covered by the agreement if made and ultimately approved. To apply the Act otherwise would in my view undermine the evident intent of the agreement making process.
[20] In this case, the employee who has agreed the instrument with the employer was not genuinely employed as part of the group of employees in the enterprise concerned.
[21] As a result, there are reasonable grounds to consider that the Agreement has not been genuinely agreed to by the employees within the meaning of s.188(c) of the Act.
[22] In any event, there are other concerns with the application that prevent its approval.
[23] I am also required to consider whether the Agreement meets the better off overall test (BOOT) in accordance with s.193 of the Act. An agreement passes the BOOT when Fair Work Australia (FWA) is satisfied that each present and prospective award covered employee would be better off overall if the agreement applied rather than the relevant modern award.
[24] The declaration as filed cited the Hospitality Industry (General) Award 2010 as the relevant modern award for the purposes of this application and I have accepted that this is appropriate.
[25] As outlined earlier, my preliminary assessment advised the parties of a series of concerns about the proposed Agreement in the context of the BOOT. I will not outline those for present purposes.
[26] The employer did subsequently provide a series of written undertakings.
[27] Section 190 of the Act provides that an enterprise agreement may be approved on the basis of undertakings that deal with certain concerns held by FWA. Subsections 190(3) and (4) provide that the Tribunal may, after considering the views of the bargaining representatives accept undertakings which address concerns arising under ss.186 and 187 of the Act provided that are not likely to cause financial detriment to the employees under the Agreement or result in substantial changes to the agreed instrument. In my view these provisions should be applied beneficially and broadly, but not such as to re-write the proposed Agreement. This is usefully discussed in the relevant Explanatory Memorandum. 2
[28] In this case, all the proposed undertakings would operate to the advantage of the employees. Some of the undertakings merely confirm the apparent intention of the parties and deal with drafting issues and these are clearly within the scope of appropriate s.190 undertakings. However, I am not satisfied that the present undertakings as they would impact upon the part-time and casual employees are sufficient to address my concerns. In order to do so, particularly in the absence of an operating enterprise where the reality of the undertakings could be readily assessed, the required undertakings would have the effect of substantially changing the terms of the Agreement and fall outside of the intended scope of s.190 of the Act. In particular, many involve provisions of the Agreement in relation to key conditions of employment for any part-time and casual employees.
[29] Given the circumstances applying here, I do not consider that I should exercise my discretion to accept the undertakings for the purposes of the approval of the Agreement. Rather, the various issues and improvements should be considered by the parties, including the employees to be engaged in the business, as part of a new instrument.
[30] Given my concerns about the Agreement in the context of the approval requirements of the Act, the Agreement cannot be approved and the application must be refused.
[31] In concluding, I would confirm my view that the parties here have not acted in a male fide manner. Rather, they have sought to have an agreement made to enable the new business to operate on that foundation. Unfortunately, this has led to issues about the process leading to the Agreement and difficulties with its application to a yet to be established operation. The proposed Agreement was not without merit. In the circumstances, I would encourage the parties to consider making a new agreement, having followed the process as required by the Act, and then making a new application to FWA. In so doing, they would be advised to consider the content issues raised in my earlier preliminary assessment.
COMMISSIONER
Appearances:
D Johns with S De Luca for Delcorp (SA) Pty Ltd T/as De Luca’s On The Park.
Hearing details (in conference):
2010
Adelaide
March 17 and 18.
Final written submissions:
2010
13 April.
1 The declaration cites that it is to apply to the De Luca’s On The Park operation of the employer and I have dealt with the application on that basis. This coverage is not however expressly stated in the Agreement itself. Given that the employer has other hospitality operations that would fall under the classifications of this Agreement, fundamental concerns about the employee endorsement process may also exist. That is, existing employees in the other operations may unintentionally fall under the Agreement and were not involved in the agreement making process at all. Given my view on the application, it has not been necessary to deal with this aspect.
2 Explanatory Memorandum accompanying the Fair Work Bill 2008 at 803-809.
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